Business Intelligence, CRM Lead Enterprise Software Market: Gartner

The market for enterprise applications continues to grow as companies regain buyer confidence for enterprise software as the market slowly recovers and organizations resume investing in technology. Projected spending is expected to total $120.4 billion this year, a 4.5 percent increase from 2011 spending of $115.2 billion, according to the latest report from IT research firm Gartner, which adjusted its forecast downward from 5 percent in the previous prediction in the first quarter of the year.
Key software market segments in 2012 include business intelligence (BI), content, communications and collaboration, customer relationship management (CRM), digital content creation (DCC), enterprise resource planning (ERP), office suites and personal productivity, project and portfolio management (PPM), and supply-chain management (SCM).

ERP, the largest enterprise application software market, with revenue projected to reach $24.9 billion in 2012, was followed by office suites at $16.5 billion. BI revenue is forecast to reach $13 billion, and CRM is on pace to exceed $13 billion this year. Due to an increasing number of organizations demanding software functionality as a service (infrastructure as a service [IaaS], platform as a service [PaaS] and software as a service [SaaS]), vendors are providing more technology as subscription-based solutions and "pay as you go" offerings, according to the report.

"The global marketplace is still experiencing a series of conflicting and contrasting economic news reports, and the full impact of the economic uncertainty on the enterprise software markets may not be readily assessable until the end of the first half of 2012," Tom Eid, research vice president at Gartner, explained in a press statement. "Spending in 2012 is anticipated to focus on industry-specific applications; upgrades to established, mission-critical software; integrating and securing established systems and infrastructure; and software as a service (SaaS) deployments representing extensions to, or replacement of, existing applications and new solutions."
The report, Forecast: Enterprise Software Markets, Worldwide, 2011-2016, 2Q12 Update, notes SaaS and cloud-based services are helping vendors expand revenue growth by making it easier for users to test and evaluate new types of software, provision new users to current technologies, and migrate users off older versions to newer versions of software. Gartner analysts said vendors offering SaaS, IT asset management and virtualization capabilities would continue to benefit from organizations looking to shift up-front capital expenses to operational expenses.
"After more than a decade of SaaS and cloud service use, adoption continues to grow and evolve within the enterprise application markets. This is occurring as tighter capital budgets demand leaner alternatives, popularity and familiarity with the model increase, and interest in SaaS and cloud computing grows," Eid continued. "Adoption varies between and within markets. Although use is expanding to a wider range of applications and solutions, the most widespread use is still characterized by horizontal applications with common processes, among distributed virtual workforce teams and within Web 2.0 initiatives."

Nathan Eddy is Associate Editor, Midmarket, at eWEEK.com. Before joining eWEEK.com, Nate was a writer with ChannelWeb and he served as an editor at FierceMarkets. He is a graduate of the Medill School of Journalism at Northwestern University.